“Provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees.”

On a plain reading, assessee should be allowed to avoid LTCG to the limit of Rs.1 crore by merely timing the transfer in some month like December, so that he can split his investment in to 2 financial years, and still remain within the period of6 months.

But then we have to look at the legislative intent as well. The limit came because large corporates would lap up the limited bonds offered by NHAI and RECL, leaving the common man in the lurch. Hence the INVESTMENT has been restricted to fifty lakhs in a financial year.

Though it appears open to interpretation, some consider such type of planning as evasion and not avoidance. There is a Notification 380/2006 issued by CBDT, which says assessee will not be allotted more than 50 lakhs bonds for the “purposes of section 54EC”…….. Again, this is a notification, and not a circular, so its binding on both AO and assessee, unlike a circular.

A conservative view would be that Rs.50 lakhs is the amount of investment prescribed by 54EC. Why? Because the timing of bond issue cannot be reasonably estimated by assessee and it would be risky to wait for the bonds, in the meanwhile, u could run into problems with this Notification, or there may be no bond open for subscriptttion at all.

The Finance Act 2007 has, however capped a ceiling of Rs.50 lakhs on the investment that can be made by an assessee in the long term specified asset, by inserting, with effect from April 1,2007 a proviso to sub-section (1) of section 54EC, which reads as under:

"provided that the investment made on or after the 1st day of April, 2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees."

The finance minister in his budget speech for the financial year 2007-08 while discussing this amendment to sec 54EC referred to the limit of Rs.50 lakh as limit "per investor per year" and not simply "per investor"

If the intention of the legislature had been to put a ceiling on the total amount of investment an assessee can make at any time the legislature would not have used the words "in any financial year" in the proviso, but would have provided that "the investment in the specified asset by an assessee shall not exceed Rs.50 lacs" Moreover the words used in the proviso are " in any financial year" and not "for any A.Y."

Eg. as to how the exemption upto Rs.1 crore can be claimed-

A disposes a property on 17-01-2010 resulting in a taxable CG of Rs. 1 crore - CG after taking advantage of 54F - then he could invest Rs.50 lacs on or before 31.03.2010 and another Rs.50 lacs on or afte 1-04-2010 however within 6 months from the date of handling of property in 54EC exempted securities....

"the investment in the specified asset by an assessee shall not exceed Rs.50 lacs"

THEN IT WOULD BE AN ABSOLUTE LIMIT on investment in the bonds, a once-in-a-lifetime limit, which would be good to not many assessees. That is why the words in a financial year have been used.

Your contention that

Moreover the words used in the proviso are "in any financial year" and not "for any A.Y."

Assessment year is defined in section 2(9) as follows

“assessment year” means the period of twelve months commencing on the 1st day of April every year

Previous year means, as per section 3.

For the purposes of this Act, “previous year” means the financial year immediately preceding the assessment year

From the above, the AY and FY are different, in the sense, former follows the latter.

But precisely because of that, the word financial year is used in section 54EC. If the words were assessment year, then it would mean the benefit could be claimed in two different years.

Speech of a Minister

Except for the limited purpose of ascertaining the mischief whichthe Act seeks to remedy,THE SPEECH OF THE MINISTER SHOULD NOT BE LOOKED INTO.

(1991) 190 ITR 418 (Cal) Soorajmal Nagarmal vs. CIT

(1991) 190 ITR 361 (Gauhati)AssamFrontier vs. UOI

(1991) 189 ITR 81 (Delhi) Escorts Ltd. vs. UOI

(1988) 173 ITR 433 (Bom) B.R. Sound N Music vs. Bhardwaj (O.P.)

“It is true that the speeches made by the Members of the Legislature on the floor of the House when a bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the bill explaining the reasons for the introduction of the bill can certainly be referred to for the purpose of ascertaining the mischief sought to be remedied by the legislation and the object and the purpose for which the legislation is enacted. This is in accord with the recent trend in juristic thought not only in western countries but also inIndiathat interpretation of a statute being an exercise in the ascertainment of intention of the Legislature, everything which is logically relevant should be admissible.”[K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC)]

“The Lok Sabha Debates and the Rajya Sabha Debates are reported in the journals of the two Houses of Parliament which are printed and published by them. The Court has to take judicial notice of the proceedings of both the Houses of Parliament and is expected to treat the proceedings of the two Houses of Parliament as proved on the production of the copies of the journals or the reports containing proceedings of the two Houses of Parliament which are published by them.”[Baburao alias P.S. Samant vs. Union of India and Others (1988) AIR 440 (SC)]

If there is no ambiguity in the language of a particular provision, notes on clauses and memorandum explaining the provision cannot be referred to as aid in interpretation.[CIT vs. Central Bank of India Ltd. (1990) 185 ITR 6 (Bom) (FB)]

Dear Balaji,
Maximum Exemption u/s 54 EC is 50 lacs
But this is no where mentioned that Assessee cannot claim 54 EC in the subsequent assessment year
Therefore, I also agree with ur Post in which u have written that 50 Lacs/ Assessee/Assessment Year.